World View & Market Commentary. Forest first; Trees second. Focused on Real & Knowable facts that filter through the "experts" fluff and media hyperbole. Where we've been, what the future may hold and developing a better way forward.

Monday, January 19, 2009

Yesterday our futures opened and proceeded to march higher on good feelings and HOPE for the future. DOW and S&P futures rose to the top of their respective channels and then began to fall overnight until Europe opened and more bad news from European banks began to emerge.

Below is a chart with the 30 minute /YM (DOW) futures on the left, and the 5 minute /ES (S&P) futures on the right. You can see how we descended in a well formed channel that we broke to the upside on Thursday and Friday. We opened higher yesterday, went up to the 38.2% fib line, then came back down and are now nearly 10 S&P points lower than Friday’s close. The way I have the current up channels drawn, we broke them to the down side but came back up just prior to the lockup:

Futures will open again tonight and we’ll find out if we then take a trip higher in the channel or if we break it to the downside.

TLT is not trading, but the long bond futures (/ZB) descended to the bottom of its channel which means that TLT may open beneath its channel which would indicate that the 3 peaks and a domed house pattern may still be in play.

Beneath is a chart with the TLT daily on the left and the long bond futures on the right. A break beneath the TLT channel would be bearish for bonds. Note that the /ZB futures on the right are now sitting at the bottom of its channel and that it was selling off at the same time as equities above (that’s a 15 minute chart of /ZB):

Tuesday is definitely going to be an interesting day with the markets open and the inauguration taking place at the same time. Many are hopeful…